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Capital Allocators – Inside the Institutional Investment Industry

May 2, 2017

Today’s show is a little different from my ongoing series of conversations with Capital Allocators.  As you probably know, about 9½ years ago I made a bet with a certain Oracle, in Omaha, that pitted the performance of a group of five hedge fund of funds against the S&P 500.

In this year’s annual letter to Berkshire Hathaway shareholders, Warren wrote extensively about his views. You can find that letter at

Now I haven’t said a lot about the bet, although fairly often I’m asked how it came about, why I made the bet, what I really think about hedge funds and the market, and of course, who's winning.

I thought long and hard about whether to share my views publicly, and had been leaning towards staying out of the limelight.  But my guest on Episode 2 of this podcast, André Perold, convinced me that I should share the many other investment lessons the public can learn from this exercise.

I thought a podcast would be a perfect venue to discuss my thoughts, so I asked my friend Patrick O’Shaughnessy to discuss the bet with me, and that conversation follows.

Before we dive in, I thought it might help to let you know where to find answers to some of those common questions I’m asked.

For starters, Carol Loomis, the legendary and recently retired Fortune columnist, wrote a wonderful piece called “Buffett’s Big Bet” back in 2008 that described in detail how the bet came to pass.  You can find her piece at

On that same page, you can find links to some of my written thoughts – both at the time of the bet’s inception and two years ago. Next week, I’ll add another link with some concluding thoughts.


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